Dems bet GOP will cave on taxes

Democrats are increasingly confident that rank-and-file Republicans will cave on taxes and force House GOP leaders to pass a tax cut plan for families who earn less than $250,000.

It’s a risky gambit with about a month before the country hits the fiscal cliff of tax increases and spending cuts.

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But Democrats, feeling like they have serious leverage, believe the only path for a deal is to pass a middle-class tax cut package to pave the way for larger fiscal negotiations in 2013 over taxes and spending.

“You can smell the winds,” Sen. Chuck Schumer (D-N.Y.), No. 3 in his party’s leadership, said Thursday. “When so many Republicans say, ‘Hey, we’re going to have to give into the Democrats,’ that’s how it works around here. That’s the beginning.”

Democratic leaders in the House see the same erosion among Republicans on tax hikes for the wealthy. Minority Leader Nancy Pelosi (D-Calif.) likened her party’s unity to last year’s payroll tax holiday fight, in which Republicans eventually capitulated and passed a plan they once opposed. Asked if the GOP would buckle, Pelosi said, “I wouldn’t say buckle. See the light might be a better term.”

Top Republicans in both chambers say that’s all wishful thinking, and the gap between the parties was laid bare Thursday. Republican leaders scoffed at an Obama administration proposal that they characterized as $1.6 trillion in tax hikes, $400 billion in cuts to entitlement programs, a permanent clean debt ceiling hike and $50 billion in infrastructure spending, calling it a major step back in the high-stakes talks. There was laughter in the room when it was presented to Senate Minority Leader Mitch McConnell, according to a McConnell aide.

Republicans argue there’s no way the GOP-controlled House and robust Senate GOP minority would agree to any revenue increases without far more significant upfront spending cuts locked in.

And by and large, the party is united in the belief that all tax rates should be extended — even for the top 2 percent of wage earners, saying doing otherwise would imperil the economy. Any revenue, they argue, should come via other means, such as capping deductions or closing tax loopholes claimed by high earners.

“We have a whole history in this country that when taxes go up — with the promise of future spending cuts that never materialize,” said Wyoming Sen. John Barrasso, No. 4 in Senate GOP leadership. “We’re suspicious of that.”

But in recent days, there’s been more slippage among Republicans on their once unmovable position against any tax hikes.